Court dismisses petition, directs trial to proceed as per law. Interim order vacated. Defense on nature of cheque at trial.

The court dismissed the petition, directing the trial Magistrate to proceed with the case in accordance with the law. The interim order was vacated, and the court emphasized that defenses regarding the nature of the cheque as security or for discharge of debt are matters to be determined during trial, not at the initial stage.

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Issues Involved:

1. Whether dishonor of a cheque due to difference in signatures constitutes an offence under Section 138 of the NI Act.
2. Whether a cheque given as security pursuant to a memorandum of understanding can be considered as issued for discharge of debt or liability under Section 138 of the NI Act.

Issue-wise Detailed Analysis:

1. Dishonor of Cheque Due to Difference in Signatures:

The petitioner argued that the complaint and order issuing process are not legally tenable as the dishonor of the cheque was due to a difference in signatures, and thus, an offence under Section 138 of the NI Act is not made out. The court examined the provisions of Section 138, which states that an offence is constituted if a cheque is returned unpaid due to insufficient funds or exceeding the arrangement with the bank. However, the Supreme Court has interpreted this provision liberally to include other reasons for dishonor, such as "account closed" and "stop payment" instructions.

The court referenced several Supreme Court judgments, including NEPC Micon Limited vs. Magma Leasing Limited, Modi Cements Ltd vs. Kuchil Kumar Nandi, and M. M. T. C. Ltd. Vs. M/S Medchl Chemicals, which extended the scope of Section 138 to various scenarios beyond insufficient funds. Specifically, in Laxmi Dyechem vs. State of Gujarat, the Supreme Court concluded that dishonor due to incomplete or mismatched signatures also constitutes an offence under Section 138. Therefore, the court rejected the petitioner's contention, following the precedent set in Laxmi Dyechem.

2. Cheque Given as Security:

The petitioner claimed that the cheque was given as security pursuant to a memorandum of understanding and not for discharging any debt or liability. The court referred to the Supreme Court's judgment in I. C. D. S. Ltd. vs. Beena Shabeer, which clarified that the issuance of a cheque, regardless of whether it is for security or direct discharge of debt, falls within the ambit of Section 138 if the cheque is dishonored.

Further, in Sripati Singh vs. State of Jharkhand, the Supreme Court held that a cheque issued as security cannot be considered worthless and that its dishonor would attract the provisions of Section 138. The court emphasized that the nature of the cheque as security does not preclude criminal proceedings under Section 138 upon its dishonor.

The court also noted that the defenses regarding the cheque being issued as security and not for discharge of any debt are matters to be determined during the trial, not at the stage of cognizance or in these proceedings. This was supported by the Supreme Court's ruling in M/S Womb Laboratories Pvt. Ltd. vs. Vijay Ahuja, which stated that such defenses are triable issues.

Conclusion:

The court found the petition devoid of merit and dismissed it, directing the trial Magistrate to proceed in accordance with the law. The interim order dated 29.09.2021 was vacated, and a copy of the order was sent to the learned Magistrate for information and compliance.

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